The Debt Panel: 'I thought I paid off my loan and then the bank said I still owed Dh44,455'

The Ras Al Khaimah resident was told by her bank that a system error miscalculated the remaining loan balance and is now demanding payment

Steven Castelluccia / The National

In December 2014, I took out a personal loan of Dh42,000 with monthly repayments set at Dh1,750. Because I had a family issue, I had to resign from my job in September 2015 and return home to the Philippines.

The bank took my end-of-service gratuity of Dh14,000 and put it towards the loan. I was not able to return to the UAE until 2017 and started repaying the loan again in September 2018. I was only able to afford to pay Dh700 as my salary was a lot lower than what I was previously earning.

In January 2020, the bank filed a police case against me in Dubai. I was living in Ras Al Khaimah at the time and when I went to renew my visa at immigration, I was sent to jail and told that I had to pay Dh6,000 before I could be released. After three days, I was transferred to Dubai as that was where the police case had been filed.

The police released me in Dubai, saying the case had been dropped as the loan exceeded five years and I didn’t have to pay anything.

My visa was renewed without a problem, but about a month later, the bank asked me to continue paying the loan. The police advised me not to answer their calls but I agreed to start repayments again.

In March 2020, I paid Dh3,000 towards the loan, and then continued to pay Dh700 a month until September 2020, when I received another call from the bank. They said the remaining balance of the loan was only Dh1,600. I made a payment of Dh800 in October and November based on what the bank told me and believed I had finally paid off the loan.

But in January this year, the bank called again, saying that I now owed a total of Dh44,455 and blamed the miscalculation on a system error. The bank is now threatening me again and saying it will file a civil case against me if I don’t restart paying monthly instalments. They have also rejected my offer of paying Dh700 a month even though this is all I can afford to pay.

I have requested that the bank provide me with statements dating back to the beginning of the loan, but so far I have not received them.

Can you advise me on what to do and what my legal rights are concerning this issue? Do loans get cancelled after more than five years? LA, Ras Al Khaimah

Debt Panellist 1: Steve Cronin, founder of DeadSimpleSaving.com

Leaving the UAE with an unpaid debt was always going to be a risky move and shows how dangerous debt can be. It makes you extremely vulnerable to unforeseen problems, such as you having to move home, and you are still living with the consequences as you have returned to the UAE.

Your situation highlights the difference between a criminal case and a civil case for non-payment of a loan. Non-payment for more than 90 days can lead to a criminal case against you. Serving time in jail or sufficient passage of time can lead to the criminal case being dropped. This is what appears to have happened here.

However, the dropping of the criminal case does not mean the unpaid debt has been waived. The bank can still relentlessly pursue a civil case against you, including the interest that has built up over the years. This civil case could result in another jail term and, in fact, most people jailed for debt are there as a result of civil proceedings against them. This is, of course, a last resort and hopefully it will not come to that.

You have a number of avenues to explore. You should try to maintain communication with your bank and ideally speak to someone with enough seniority to make decisions.

Ask the bank for confirmation that the remaining balance was Dh1,600 and this has now been paid off. You may get different information from different people you speak to. You should also insist on receiving statements and this is something you could take to the Central Bank of the UAE's Consumer Protection Department if the bank refuses to respond to your complaint within 30 days.

You could talk to a lawyer to further understand your legal rights in this situation, though do not expect them to be able to make this case go away. You may indeed have to pay off the Dh44,455. If you really struggle with this, you could approach the bankruptcy courts, but this would probably lead to a three-year payment plan and a travel ban. A three-year plan would also greatly exceed Dh700 in monthly payments.

Once you have clarity from the bank, you will need to formulate a plan that may involve finding ways to boost your income, reduce your expenses, get support from friends and family or selling assets to finally get this debt cleared as it won’t go away by itself.

Debt panellist 2: R Sivaram, executive vice president and head of retail banking products at Emirates NBD

Your current situation is most unfortunate and I empathise, but I am also glad that you are being conscientious and looking for a resolution.

As a first step, I would recommend that you schedule an appointment with the concerned department of the bank. Collate all previous communication sent to you by the bank with respect to your loan dues. Also, collect evidence of all payments you made to the bank since the disbursement of the loan.

Present this information to the bank to demonstrate your past efforts to close the loan. Given that you have been making repayments, including assigning your end-of-service settlement, it seems unlikely that your original loan amount is still outstanding. Request for more details on the overdue loan balance to understand this further.

Keeping in mind the bank’s admission to a system error and your consistent efforts to close the loan, negotiate a final settlement amount with the bank to help close the matter. The revised amount could then be re-structured as a new loan for a longer tenor to make the instalments compatible with your budget.

It is likely with the arguments you present and the fact that the case has been dismissed by the police, the bank will take a more lenient position. I wish you the very best in achieving a final resolution to this situation at the earliest.

Debt panellist 3: Carol Glynn, founder of Conscious Finance Coaching

This is a stressful and confusing situation for you, but loans do not get cancelled after more than five years in the UAE. I am surprised that you were told otherwise. Were you provided with anything in writing at the time of your release from jail? This would be useful to have on file.

If not already done so, keep detailed records of all communications with the bank, both written and verbal. Include dates, names of personnel and times of conversations so they can be easily identified on the bank’s records.

It is extremely unusual for the bank to confirm the loan is closed and then claim you owe such a large amount. Was this a verbal or written confirmation? It will be helpful to your case to have evidence of this confirmation to show to the bank and, if necessary, the UAE Central Bank's Consumer Protection Department.

You are correct to seek the statements from your bank to verify if any amount remains outstanding. Have you submitted the request by email to your bank? If not, do so along with a complaint regarding being told your loan was repaid in full only to be subsequently told you owe more than your original loan amount. Send this to the bank’s official complaints department. You will find the relevant address and details on the bank’s website.

If you cannot resolve this directly with the bank, it may be advisable to consult a lawyer who specialises in debt issues such as this. In the meantime, keep communicating with your bank. It will likely help to prevent them from submitting another police case against you.